2017 (3) TMI 65 - AT - Service Tax

Recovery of short paid tax from legal heir, on death of assessee - Held that - reliance was placed in the case of Shabina Abraham v. Commissioner of Central Excise & Customs 2015 (7) TMI 1036 - SUPREME COURT , where an individual proprietor has died through natural causes and it is nobody s case that he has maneuvered his own death in order to evade excise duty - the High Court went into morality and said that the moral principle of unlawful enrichment would also apply and since the law will not permit this, the Act needs to be interpreted accordingly - the demand of duty and penal action are not legal and proper - appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against order-in-appeal for short-paid levy of service tax, abatement of proceedings sought, confirmation of duty, interest, and penalty on legal heir, interpretation of the necessary machinery provisions under the Central Excises and Salt Act, 1944.

Analysis:
1. The appellant, as the legal heir of the deceased assessee, appealed against the order-in-appeal for the short-paid levy of service tax amounting to ?18,16,206 under section 73 of the Finance Act, 1994. A partial payment of ?9,80,256 was made before the demise of the assessee, with an additional deposit of ?2,00,000 after his death. The appellant sought abatement of proceedings, which was not accepted, leading to the confirmation of duty, interest, and penalty by the original authority and upheld in the appeal.

2. The absence of representation for the appellant during the hearing led to a consideration of the settled issue by the Hon'ble Supreme Court in the case of Shabina Abraham v. Commissioner of Central Excise & Customs. The Court emphasized the distinction between cases involving dissolved partnership firms and cases where an individual proprietor passes away naturally. The Court highlighted that the machinery provisions of the Central Excises and Salt Act cannot be extended based on assumptions or conjectures. It was noted that the Income Tax Act contains specific provisions for dissolved firms, unlike the Central Excises and Salt Act, which does not provide for the assessment of excise duty on a deceased individual.

3. The Court further discussed the argument regarding Section 11A of the Central Excises and Salt Act as a machinery provision, clarifying that there is no charge to excise duty on a deceased person under the main charging provision. The judgment concluded that the demand for duty and penal action on the legal heir was not legal and proper. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant, the legal heir of the deceased assessee.